Darryl Barber is the enterprise marketing manager for the automotive industry at UPS. He spoke to Aftermarket Business World about his company’s role in aftermarket logistics, and emerging services for the automotive sector.
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How is the role of 3PLs in the aftermarket changing?
The aftermarket is growing at 4 to 6 percent. There’s been a longstanding gap for small and medium-sized businesses (SMBs) when it comes to exporting. If you haven’t tried exporting a while, the technology has changed, and it’s much easier and less expensive than it was in the past. There’s a growing need to get to other countries, and having earlier delivery through services like UPS Express gives you an advantage.
Where do you see opportunity for smaller distributors or manufacturers?
One thing we’re talking about on the SMB side is consumer-driven, fast-growth markets that may not be on their radar. Sweden is not a top export market for the aftermarket, but there is growing demand there for parts like tires, rims and stereos, and the U.S. only has a small percentage of that market. Exports to Sweden are growing by double or triple digits.
Canada and Mexico are big markets and easy to get into, but there are countries like Chile where most of the market is imported, and the majority of those parts are not OEM replacement parts. There’s a lot of room for a small, independent company to grow.
How is uncertainty around NAFTA affecting logistics?
There is a lot of uncertainty. Last year we saw something like 350,000 finished units move from Mexico to the U.S., and there are a lot of local incentives moving that, but that aren’t directly related to NAFTA. Some companies are hedging their bets.
Everyone is concerned, but there is no view that there is going to be a big migration away from Mexico as a source of production. German and Asian automakers are pushing forward there.
What do you see as the key logistics challenges for the aftermarket?
E-commerce is a big disrupter. While parts sales have growth of 3.5 to 4 percent, channel growth in e-commerce is anywhere from 15 to 21 percent. It’s much more rapid.
Companies are really striving to create a seamless, omnichannel experience for customers. If you are fulfilling in multiple channels, inventory has to be consistent so you don’t experience stock outs. What you show in the digital space has to translate back to what you’ve done in the brick-and-mortar space.
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